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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3671
Experience:  Solicitors 2 years plus PQE
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Right to buy S156 etc. A restriction on contract : no transfer

Customer Question

Right to buy S156 etc. A restriction on contract : no transfer or lease of the estate within 10 years of agreement.
Is this what it says on the tin? it seems to contradict the S156 in that I can sell after 5 years without losing my discount?
The restriction also states no lease of the registered estaste in 10 years. Presumable this means that I cant sub let or sublease within 10 years? however the general RtB paperwork would suggest that I could do this with a deed of covenant from the freeholder (local Council) is this correct?
Thanks in anticipation...
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Is this a restriction on the Property Register of the Official Copy of the property?
How is the restriction in favour of? The Council? Was it placed there when you purchased the property? If so were you advised by a solicitor?
Kind regards
AJ
Customer: replied 3 years ago.

It is on the contract that I have received from the freeholders(council) solicitor as part of the Right to Buy transaction to purchase a 125 year leasehold. I have not yet signed, as this restriction could stop me buying the leasehold as i intended to 'sub lease ' in a year or two. On the contract it was listed under schedule 9 ; Restrictions: no transfer of lease or lease of the estate within 10 years of agreement.It seem pretty straight forward that I can't sub lease, however reading the housing act and all of the Leasehold sections it would seem that the freeholder would not usually withold this if requested in writing.

I have tried to reconcile this by asking the question: would the freeholder normally cecede to me , as the leasholder , subleasing. But they say I need legal advice!

Expert:  Alex J. replied 3 years ago.
Hi,
Thank you.
So do you want to sub let on an Assured Shorthold Tenancy?
Kind regards
AJ
Customer: replied 3 years ago.

Yes, probably a 12 month with a rolling agreement probably.

Expert:  Alex J. replied 3 years ago.
Hi,
Thank you.
Technically the council are the seller and they are free to include what ever they like.
However have you considered asking for a carve out that says - after 2 years the buyer may sublet the property on an assured shorthold tenancy with the consent of the council (such consent not to be unreasonably held or delayed).
You could also take the view that if you are forced to agree to this clause you just take a risk after to years and sub let it on an AST anyway. What is the likelihood that the council will monitor it? The spirit of the clause is essentially they want to stop you buying the property from them and then making a massive profit straight away.
The starting point has to be that you need to ask for a right to sublet on an AST basis.
I look forward to hearing from you.
Kind regards
AJ
Alex J. and other Law Specialists are ready to help you
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

As a side point, if the council are going to insist that this is a restrictive covenant on the property then you can actually obtain indemnity insurance against this that costs a couple of hundred pounds (one off payment).

I would also note that if you take the decision to just breach the clause in two years time and sublet anyway, then ensure any AST that you sign has a the right for you to terminate it at short notice. That way you can get the property back if the council do sue you for breach of contract.

Obviously the best situation is to just ensure you have their consent.

I look forward to hearing from you.

Kind regards

AJ
Customer: replied 3 years ago.


Yes thats useful. I think I have to work on the basis that they wont remove this covenant and therefore possibly get the indemnity insurance as you mention, or when I am ready to sub lease (if i do!) I follow the rule book with a polite request and hope that they view favourably as various written guidance would suggest.


 


Thanks again

Expert:  Alex J. replied 3 years ago.
Thank you.

What I suggest you do is phrase it to them so that the clause says something like - "you can sublet on an assured shorthold tenancy basis subject to the consent of the council, such consent not to be unreasonably with held or delayed".

Kind regards


AJ
Customer: replied 3 years ago.


I like the phraseology. I am finding it is important to use the correct phrases so that is very useful. Also to write in a respectful and courteous manner.


 


Thanks again for this. I will let you know how i get on if I can.


 


Best regards

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

I wish you the best of luck.

Kind regards

AJ